Number of Advisers Becoming RIAs Expected to Rise

A
Charles Schwab survey of advisers at major financial firms found that more than
three-fourths (76%) of those surveyed expect a continued increase in the number
of advisers transitioning to independent registered investment advisers (RIAs).

More
than half (51%) say that they find the idea of being an RIA appealing. Younger
advisers, in particular, show an interest in independence; 65% of those
surveyed who are under age 40 find the idea of becoming an RIA appealing,
compared to 43% of those ages 40 and over.

The
top three benefits cited by advisers who find the idea of becoming an RIA appealing
include the potential for larger income (56%); the freedom that comes with
running their own business (52%); and the ability to place a higher priority on
client service and communications (51%).

Eighty-nine
percent of those surveyed say that they are more committed to serving their
clients than serving their firms. While most advisers view the ability to place
a higher priority on client needs and to offer a broader set of investment
products and services as potential benefits in joining or starting an
independent RIA firm, advisers under 40 are even more likely to see these as
benefits.

Perhaps
indicating the effect of more years in the business of serving clients, advisers
over 40 were more likely than their under-40 peers to believe that clients are
more loyal to their adviser than they are to an adviser’s firm, and they were
also more likely to think that their clients would follow them if they left to
start their own firm.

“The
survey results reinforce the client-service orientation of advisers considering
independence and the responsibility they feel to meeting their clients’ needs,”
said Tim Oden, senior managing director of business development at Schwab
Advisor Services. “Also interesting to me is the appeal of the RIA model to
advisers under 40, suggesting that the movement to independence isn’t just a
flash in the pan; it’s more likely to be a long-term trend.”

Resources for advisers considering a transition to
the RIA model

Schwab
Advisor Services launched website content (schwabadvisorcenter.com/futureyouwant) that provides detailed information about becoming
an RIA to advisers
considering the transition to independence. The website features video testimonials and case studies that give
viewers first-hand accounts of advisers’ experiences in moving to the RIA
model, as well as insight into how they made the transition.

Schwab
will also host the Build
the Future You Want webcast on March 28 at 1 p.m. PT to help advisers learn
more about the independent model, explore their options, and get an assessment
of the risks, benefits, and economic potential associated with becoming an RIA.

In
addition, the latest Schwab
Talk blog post features Tim Oden discussing steps to consider when
transitioning to independence. Schwab will also host a Twitter Q&A with Tim
Oden to answer questions about making the move to the RIA model. Information on
how to submit a question, as well as guidelines for participating, are
available on Twitter at @Schwab4RIAs.

More
than 200 financial advisers participated in the survey, conducted by Koski
Research from December 3 to 18, 2011. Those surveyed work at major full-service
firms and manage a minimum of $10 million in assets. Sixty-four percent
of the advisers in the survey have more than 10 years of investment advisory
experience.